Heavy investments weighed on Facebook second quarter profit as sales jumped by 39%

Facebook CEO Mark Zuckerberg had warned 2015 to be a year of heavy investments(Reuters)

High costs weighed down on Facebook's profit by 9% in the second quarter of its financial year, the social network giant reported. In its half year report, the company told investors the 39% jump in revenue to $4.04bn (£2.59bn, €3.68bn) over the quarter was not enough to prevent its profit from falling because it invested in the company's mobile division and direct message platforms.

Renowned founder and chief executive of Facebook Mark Zuckerberg stated: "This was another strong quarter for our community. Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services."

The network, which provides a platform for almost 1.5 billion monthly users, performed strong in its advertising unit, which jumped by 43%. A total of 76% of Facebook's total $3.88bn advertising sales came from mobile users, a 14 percentage point increase. The company reported better than expected sales but felt the burn of high costs and investments as shares dropped by almost 2% after trading hours.

Analysts, however, agree that the heavy investments the company had announced it would make in 2015, will result in strong revenue growth and, eventually, a rise in profits.

The results are a lot more positive than market expectations. Eleni Marouli, senior technology and advertising analyst at IHS Global insight told IBTimes UK ahead of the results that she expected more single-digit sales growth in Europe and North America.

Marouli predicted the importance of video for Facebook and said Zuckerberg's most important task was to adapt to the higher video demand and its role on the mobile platform. She said: "In terms of opportunities, video will be a big one, and that is also what Facebook needs to target now, in terms of content and advertising.

"They exceeded Youtube's viewer count in December but to compete in the long term they need more engagement, which means they have to start hosting or creating premium video content, like Youtube does. They are already doing well in terms of partnerships with parties like HBO, National Geographic and the New York Times and they even host one of the HBO shows directly."

As forecast by Marouli, video advertisements were the company's biggest growing sales source, showing the company's agility and ability to monetise new content forms. She said: "Facebook has shown they are good at transforming themselves, when we look at their adaption to the mobile boom."

Facebook has become a worldwide phenomenon. The company currently has a market cap of $276.4bn and is by far the biggest social media company. However, after main competitor Twitter announced an overhaul that would make the website more social, the market might turn more competitive.

Marouli also warned that the platform's management should not get too comfortable. She said: "A challenge Facebook might face in the future would be competition."